Wall Street giant Bernstein expects its total revenue for crypto to jump to nearly $400 billion by 2033. The broker also expects on-chain revenue to increase from around 15% today to about half of total cryptocurrency revenue. According to Bernstein, the crypto custody service will form the basis of institutional adoption.
“Total revenue for cryptos will make 16x in 10 years”
In a research report he published, Bernstein says this year will lay the foundations for a decade of ‘golden age’ innovation for cryptocurrency applications as cryptos evolve from a fat infrastructure thesis to a fat app thesis. The broker expects total crypto revenue to grow 16-fold over the next 10 years, from around $25 billion in 2023 to around $400 billion in 2033.
Of the estimated $400 billion revenue pool, Bernstein says ‘decentralized blockchain-focused revenue’ will account for about half of the total revenue pool, up from just 15% today. The Wall Street giant expects on-chain revenue to approach nearly $200 billion over the next decade, from just under $4 billion today, thanks to “innovation in blockchain scalability and application growth in the financial services and consumer technology segments.”
“NFT-based game revenues will drive growth”
The report estimates that consumer and finance apps will account for around 75% of on-chain revenue, up from around 40% last year. According to the report, decentralized exchanges (DEX), lending and structured/tokenized products are expected to be the main revenue drivers in on-chain financial applications.
Meanwhile, Non-Fungible Token (NFT) based gaming revenue is predicted to be the biggest driver of growth in on-chain consumer applications. Also, for off-chain revenue, Bernstein expects enterprise services to be a growth driver, including prime brokerage, custody, and market creation.
“Cash services will form the basis of institutional crypto adoption”
cryptocoin.com According to our report, the crypto custody revenue opportunity could rise to $8 billion by 2033. Bernstein says the collapse of crypto exchange FTX has led to a greater focus on the use of regulated custodians. It also estimates that custody revenue could rise from less than $300 million today to $8 billion in 2033. Analysts Gautam Chhugani and Manas Agrawal comment:
Crypto custody is the key enabler of institutional adoption. Unlike legacy storage, crypto custody is all about securing the private key. This makes it a more technological endeavor.
Bernstein analysts say they expect a jump in ‘crypto custody penetration’ with existing investors post-FTX and sharp growth in custody services over the medium term driven by increased institutional participation in digital asset markets. The broker notes that there is a huge revenue opportunity for crypto firms and banks to provide new crypto investors with Wall Street-like custody, market formation and primary brokerage services.
Market maker is expected to increase as institutional participation increases, and with it, as demand for liquidity in large-volume cryptos and less popular tokens increases, the report said. A market maker is a firm that provides liquidity for an asset or security. Institutional crypto investors will also need primary brokerage services such as over-the-counter trading desks, derivatives, lending and other structured products. Bernstein estimates this could reach a revenue opportunity of $14 billion by 2033.
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